Can an Employer Refuse to Reimburse Expenses?

Under California law, employers are required to reimburse employees for all necessary expenses incurred for their work. This can include gas for travel, meals, if an employee was required to work during a meal, and a range of other costs.

Timesheets.com notes that California law requires employers to reimburse employees for some expenses not required by the federal government. One such expense is mileage — California law requires employers to compensate employees for mileage, but the federal government does not.

Some employees may not be aware that they are entitled to reimbursement, or may ask, “Can an employer refuse to reimburse expenses?” Unfortunately, some employers may not sufficiently reimburse employees, or may refuse to reimburse expenses altogether. This is unlawful, but may occur nonetheless.

What Expenses Can Be Reimbursed?

A range of expenses could be eligible for reimbursement. In most cases, expenses that should be reimbursed, or covered by employers, include:

• transportation, mileage, parking
• hotel room expenses
• other travel expenses
• purchasing, maintaining, or cleaning a uniform
• purchasing supplies, tools, equipment, and materials used for work
• meal funds or stipends to cover a meal when the employee is required to work during the evening
• cell phone use related to work

How Can I Get Reimbursed for Expenses?

In most cases, employees are required to present receipts to be reimbursed for expenses. This is often required so employers can see how much money was spent on necessary work expenses and should be reimbursed.

The Society for Human Resource Managemen (SHRM) notes that some employers require employees to seek pre-approval for reimbursements as opposed to accepting receipts after an expense is incurred. This can reportedly help employers determine what expenses are necessary and required to complete assigned work.  

Can an Employer Refuse to Reimburse Expenses?

If an employee does not provide accurate records, the employer can refuse to reimburse the expenses.

In some cases, in lieu of expense reimbursement, an employer may offer a higher salary than they otherwise would. This strategy is more complicated than providing reimbursement because wages and reimbursement are not the same thing. Wages are taxable and subject to deductions, whereas reimbursements are not. Reimbursements should be fully paid to an employee.

If an employer offers a higher salary in place of reimbursements, the employer should have a system in place to show what portion of the salary is enhanced, or  intended for reimbursement. Employers should be able to distinguish what wages they are paying to employees for labor and what they are paying employees for business expenses. This will help ensure that employees receive the compensation they are due.

How Might an Employer Refuse to Reimburse Expenses Unlawfully?

Some employers may try to avoid reimbursing employees for business expenses as a way of effectively outsourcing their business costs to employees. For example, if an employee is required to wear a uniform, uniforms should be part of the employer’s operating costs. If the employer requires the employee to purchase his or her own uniform, and does not reimburse them for it, the employer is effectively outsourcing their business costs to their employees This is unlawful, but it can sometimes occur.

In other cases, employers may improperly classify employees as independent contractors to avoid reimbursing them for expenses. Independent contractors are not owed reimbursements, while employees are. This is effectively a way an employer may refuse to reimburse expenses and get around California law.